G.R. No.

176289

April 8, 2013

MOLDEX REALTY, INC., Petitioner,

vs.
FLORA A. SABERON, Respondent.
Facts: respondent Flora asked Moldex, to reserve the lot for her as shown
by a Reservation Application6 Flora opted to pay on installment and began
making a periodical payments Moldex sent Flora notices reminding her to
update her account. Upon inquiry, however, Flora was shocked to find out
that as of July 1996, she owed Moldex P247,969.10. Moldex thus suggested
to Flora to execute a written authorization for the sale of the subject lot to a
new buyer and a written request for refund so that she can get half of all
payments she made. However, Flora never made a written request for
refund.
Moldex, then sent Flora a Notarized Notice of Cancellation of Reservation
Application and/or Contract to Sell.9 Flora, on the other hand, filed before the
Housing and Land Use Regulatory Board (HLURB) Regional Field Office IV
a Complaint10 for the annulment of the contract to sell, recovery of all her
payments with interests, damages, and the cancellation of Moldexs license
to sell. Flora alleged that the contract to sell between her and Moldex is void
from its inception. According to Flora, Moldex violated Section 5 of
Presidential Decree (PD) No. 95711 when it sold the subject lot to her on April
11, 1992 or before it was issued a license to sell on September 8,
1992.12 Flora likewise claimed that Moldex violated Section 17 of the same
law because it failed to register the contract to sell in the Registry of
Deeds.13In its defense, Moldex exercised its right under Republic Act (RA)
No. 6552,14 or the Maceda Law, by cancelling the reservation
Agreement/Contract to Sell and forfeiting all payments made. Finally, Moldex

alleged that since Flora was at fault, the latter cannot be heard to make an
issue out of Moldexs lack of license or demand relief from it.
the HLURB Arbiter declared as void the Contract to Sell entered into by the
parties because Moldex lacked the required license to sell at the time of the
contracts perfection, in violation of Section 5 of PD 957.
Hence, Moldex was ordered to refund everything Flora had paid, plus legal
interest, and to pay attorneys fees. Moreover, Moldex was ordered to pay a
fine for its violation of the above provision of PD 957
In its Petition for Review18 before the HLURB Board of Commissioners
(HLURB Board), Moldex argued that the absence of license at the time of
the contracts perfection does not render it void
the HLURB Board, in a Decision19 dated July 29, 1999, dismissed the
petition and affirmed in toto the Arbiters Decision. It held that the law is clear
on the prerequisite of a license to sell before a developer can sell lots. Since
Moldex did not have a license to sell at the time it contracted to sell the
subject lot to Flora, the Board agreed with the Arbiter in declaring the
contract invalid and in ordering the refund of Floras payments. Moldex then
appealed to the Office of the President (OP).20. the OP affirmed the finding
that the contract to sell was a nullity.
Moldex thus sought relief with the CA via a Petition for Review.23the CA
agreed with the findings of the tribunals. It ratiocinated that Moldexs nonobservance of the mandatory provision of Section 5 of PD 957 rendered the
contract to sell void, notwithstanding Floras payments and her knowledge
that Moldex did not at that time have the requisite license to sell. It also held

that the subsequent issuance by the HLURB of a license to sell in Moldexs

favor did not cure the defect or result to the ratification of the contract.
Issue
Moldex only raises the matter of the validity of the contract to sell it entered
with Flora, contending that the same remains valid and binding.

applied. The general penalties for the violation of any provisions in P.D. 957
are provided for in Sections 38 and 39. As can clearly be seen in the
aforequoted provisions, the same do not include the nullification of contracts
that are otherwise validly entered.28
Thus, the contract to sell entered into between Flora and Moldex remains
valid despite the lack of license to sell on the part of the latter at the time the
contract was entered into.

Our Ruling
A review of the relevant provisions of P.D. 957 reveals that while the law
penalizes the selling of subdivision lots and condominium units without prior
issuance of a Certificate of Registration and License to Sell by the HLURB, it
does not provide that the absence thereof will automatically render a
contract, otherwise validly entered, void. The penalty imposed by the decree
is the general penalty provided for the violation of any of its provisions. It is
well-settled in this jurisdiction that the clear language of the law shall prevail.
This principle particularly enjoins strict compliance with provisions of law
which are penal in nature, or when a penalty is provided for the violation
thereof. With regard to P.D. 957, nothing therein provides for the nullification
of a contract to sell in the event that the seller, at the time the contract was
entered into, did not possess a certificate of registration and license to sell.
Absent any specific sanction pertaining to the violation of the questioned
provisions (Secs. 4 and 5), the general penalties provided in the law shall be

Moreover, Flora claims that the contract she entered into with Moldex is void
because of the latters failure to register the contract to sell/document of
conveyance with the Register of Deeds, in violation of Section 1730 of PD
957. However, just like in Section 5 which did not penalize the lack of a
license to sell with the nullification of the contract, Section 17 similarly did
not mention that the developers or Moldexs failure to register the contract
to sell or deed of conveyance with the Register of Deeds resulted to the
nullification or invalidity of the said contract or deed.
Under the Maceda Law, the defaulting buyer who has paid at least two years
of installments has the right of either to avail of the grace period to pay or,
the cash surrender value of the payments made: